KUWAIT CITY (WASHINGTON POST) - The United States and Qatar signed a memo of understanding on Tuesday (July 11) on steps the tiny Persian Gulf nation will take to stop the funding of terrorism, US officials said on Tuesday (July 11).

The agreement aims to encourage Qatar's neighbours to abandon their embargo on the country.

The memo was announced in the Qatar capital of Doha, where Secretary of State Rex Tillerson spent the day working to resolve a regional feud that the US fears could derail efforts to fight groups like the Islamic State in Iraq and Syria (ISIS) and could embolden Iran.

Mr Tillerson flies to the Saudi city of Jiddah on Wednesday (July 12) to discuss the crisis with foreign ministers from the four Arab states leading the boycott - Saudi Arabia, Bahrain, the United Arab Emirates and Egypt.

The Arab countries placed a trade and diplomatic embargo on Qatar a month ago, accusing it of providing financial support to terrorist groups. Qatar has rejected 13 broad demands from those nations, including closing the television network Al Jazeera, which criticises many governments in the region. Qatar has denied the charges, and considers the embargo an infringement on its sovereignty and independence.

Though President Donald Trump has sided with Saudi Arabia in the row, Mr Tillerson told reporters in Doha that Qatar's views were "reasonable" and that he is optimistic the differences can be reconciled.

"I am hopeful we can make some progress to begin to bring this to a point of resolution," Mr Tillerson said, standing beside the Qatari foreign minister Sheikh Mohammed bin Abdulrahman al-Thani on Tuesday.

"I think Qatar has been quite clear in its positions, and I think those have been very reasonable."

The Trump administration worries that the embargo against a country where the US has a large air base could affect military operations and push Qatar further into the arms of Iran, which has allowed Qatar to use its air and sea lanes after the Gulf states suspended all flights to and from Doha and severed diplomatic ties.

Though full details of the agreement between the US and Qatar were not immediately available, Mr Tillerson adviser R.C. Hammond said it outlines "future efforts Qatar can take to fortify its fight against terrorism and actively address terrorism funding issues".

"This is a hopeful step forward," he said.